AUSTIN (KXAN) — Last week, the Austin Board of Realtors (ABoR) announced that Austin reached an important metric: The supply of homes for sale is now enough to meet four months of demand.
ABoR economist Dr. Clare Losey talked with KXAN on April 12 about the board’s March report.
“When we see more inventory, of course, it means that there are more options across the board for buyers,” Losey said. “For sellers, it means of course that there are more options for buyers to choose from. So they’re going to have to work a little bit more closely with their Realtors just to make sure that they are well prepared to make a sale.”
For Austin, Losey said in December 2023 that the city needs to be above five months of demand to be “healthy.”
“Generally speaking, we’re entering a market in which there are just more healthy levels of inventory across the board,” Losey said.
Home prices have remained stable due to several months of steady mortgage rates, Losey said. However, the median sales price sits at $564,995, up 2.7% from last year.
“We know that for any given homebuyer in the Austin MSA, they generally need to make an income of $90,000 to $100,000 to even be able to enter the market for homeownership,” said Losey in December 2023. “Finding a supply of affordable inventory at price levels that are conducive to that income is another story.”
Local rent now under national median
The median local rent in the Austin-Round Rock Metropolitan area is down 12.2% from February 2024 to $1,902, according to a report from Rent. The same report also has the national median at $1,987.
Other large Texas cities, such as Dallas and Houston, also saw a smaller decrease in the median rent price.
Kate Terhune, director of brand for Rent, said that the national median rent’s year-over-year change was relatively “flat.”
“What we used to see last year was crazy high rent prices. Everybody was moving to Austin, it seemed like, and now those prices are starting to stabilize a little bit across the state of Texas,” Terhune said. “Migration also is slowing. We aren’t seeing people move quite as frequently as we did during the pandemic. Less people moving to Austin is going to have an impact on all housing costs.”
In order for that median rent to not be considered a cost burden, it would need to be less than 30% of a household’s total income. Thus, an Austin-Round Rock metro household would need to make a yearly income of at least $68,472, or $23.98 hourly.
However, that is not a reality for 48% Austin residents who spend more than 30% of their income on housing, according to a Harvard University report.
Austin’s recent construction wave may help renters by further driving down prices.
“More supply is going to be more choices for renters, and that’s going to help rent prices from going up too high,” Terhune said. “Austin, on the other hand, is seeing an increase of 77% new units. So that outpaces the growth in the rest of the country. That should help rent prices continue to fall from those record highs.”
The rental market and housing supply are linked — as more housing becomes available, first-time homebuyers have more chances to make the jump from rentals.
“We expect [if] interest rates fall, more people will be buying houses and less demand will exist in the multifamily industry. It’ll be harder for property managers to increase rent prices drastically when that demand isn’t there.” Terhune said.
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